Dayton to lay out state tax, spending wishes at 11 a.m.

Article by: BRIAN BAKST

Associated Press

January 22, 2013 - 10:22 AM

Months in the making, Gov. Mark Dayton's two-year state budget plan is set to be released at 11 a.m. Tuesday and will likely rely heavily on tax increases to solve a projected $1.1 billion deficit and boost spending on his other priority programs.

His plan is the starting point in a tax-and-spending debate that will reach well into spring. With fellow Democrats now in charge of the Legislature, Dayton's plan carries tremendous weight and a high likelihood that much of it will be enacted.

Lawmakers must approve a budget by July 1 to avoid service interruptions. Barring unexpectedly deep spending cuts, the state is expected to spend more than the $35.2 billion that it was on course to shell out in the current two-year budget.

Unlike in 2011, when a newly elected Dayton had just a couple of months to craft his recommendations, the governor has spent much of the last year examining options.

Administration officials say the budget proposal will include a substantial overhaul to the state's tax code, which could potentially affect how much people pay at cash registers and in income and property taxes.

Dayton has long said he would push for higher income taxes on top-end earners, but he hasn't said what that rate would be or at what salary it would kick in. His Revenue Department commissioner has talked extensively about problems with the sales and property taxes yet stopped short of saying what the administration would do to address either.

The corporate tax, which is one of the nation's highest, is also on the table.

While the intrigue largely surrounds Dayton's tax vision, the governor also is expected to outline his spending plans for public schools, colleges, health and welfare programs, and economic development grants. Dayton campaigned in 2010 on a "no excuses, no exceptions" promise to increase spending on public education each year he was governor.

Overview hearings on Dayton's budget will begin Wednesday. But lawmakers are expected to wait until March or later to begin votes on the recommendations or their substitute. In late February they will get an updated economic forecast, which will determine whether the estimated deficit they must erase is larger or smaller.

"We have the luxury of getting to see the reaction across Minnesota" before acting, said House Tax Committee Chairwoman Ann Lenczewski, DFL-Bloomington.

The budget address was marking Dayton's return to public view after spending the past month recuperating from spinal surgery.